In the U.S. District Court for the Western District of Texas, Judge James R. Nowlin entered summary judgment against Marleen and John Jantzen. In SEC v. Jansen, the Securities and Exchange Commission had charged the couple with Texas securities fraud for using insider information about Dell Inc. to buy Perot Systems Corp. securities. Marleen is a former Dell administrative assistant. John is a registered stockbroker.
The SEC submitted the allegations against couple in October 2010 and contended that Marleen gave material, nonpublic information about Dell’s upcoming tender offer for Perot shares to her husband. The Commission claimed that on September 18, 2009, which was the final day of trading prior to the announcement of the Perot acquisition, Marleen, who was given “explicit orders” by her employer “not to trade, ” made a cash transfer to the Jantzens’ brokerage account. Within minutes of the money being moved over, John bought 24 Perot call options contracts and 500 shares of Perot common stock. He cashed in on September 21, 2009, which is the same day that Perot Systems and Dell announced the tender offer. (The stock price had immediately gone from $17.91 to $29.56, allowing the couple to make $26,920.50 in trading profits in a single day.)
According to the Court, the Jantzens violated sections 14(e) and 10(b) of the Exchange Act and Rules 14e-3(a) and 10b-5 thereunder, and Marleen also violated Rule 14e-3(d). The couple is enjoined from future violations of these provisions. They must also pay $26,920.50 in ill-gotten gains, as well as prejudgment interest. The Court also found that per evidence, there was a “high degree of scienter” especially involving John, who, as a licensed securities broker, was most certainly cognizant of his actions and their meaning. The district court, however, has deferred a final ruling on the SEC’s request for monetary penalties pending further briefing by both sides.
The Jantzens are not the only ones to settle with the SEC over insider trading related to the Dell-Perot Systems deal. In 2010, Texas resident Reza Saleh agreed to give back over $8.6M in illicit profits he made after he made illegal trades in Perot Systems call options before the merger was made public.
Saleh, who used to work for companies owned by the Perot family, settled the Texas securities claim without deny or admitting to the allegations. He also consented to an SEC administrative order that says he cannot associate with any investment advisers ever again. He also agreed to a permanent enjoinment that would prevent him from violating the Securities Exchange Act of 1934’s anti-fraud provisions in the future.
SEC settles insider trading case involving Perot acquaintance Reza Saleh, Dallas News, January 6, 2010
More Blog Posts:
Texan R. Allen Stanford Convicted on 13 Criminal Counts Over $7.2B Ponzi Fraud, Stockbroker Fraud Blog, March 7, 2012
NFA Enforcement Action Filed Naming Texas Financial Firm J Hansen Investments, Stockbroker Fraud Blog, February 26, 2012
US Sentencing Commission is Open to Public Comment on Proposed Amendments that Could Impact Insider Trading Convictions, Institutional Investor Securities Blog, February 29, 2012
Our Houston securities fraud lawyers at Shepherd Smith Edwards and Kantas, LTD, LLP represents investors throughout the state.
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s state. The content of this Website contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this Website. Read More.